ASIC claims CommFP was not “upfront”
The Australian Securities and Investments Commission (ASIC) has admitted there was "ambiguity" in the communications between itself, Commonwealth Financial Planning (CommFP) and an independent monitor which led to a Senate committee being misled over client compensation arrangements resulting from a 2011 enforceable undertaking.
The ambiguity was acknowledged by ASIC chairman, Greg Medcraft who formally apologized to the Senate committee for providing what proved to be misleading information about the client compensation arrangements.
However the ASIC chairman claimed CommFP had not been "upfront" with ASIC about changing its compensation methodology
The claimed "ambiguity" described by Medcraft has resulted in license conditions being imposed on both CommFP and its sister group, Financial Wisdom.
In an opening address to a hearing of the Senate committee, Medcraft described what he believed had given rise to the shortcomings in the client compensation arrangements.
"In practice, there was ambiguity in communications between ASIC and the bank and with the independent monitor," he said. "As a result, there were different interpretations of what was expected."
The ASIC chairman then admitted fault on the part of the regulator, saying "We should have controlled the process more tightly so that the departure from the original agreed methodology could not have happened".
However he also pointed to the bank as having failed in obligations saying, "ASIC was keen that methodology originally agreed upon with the bank for compensating customers was applied consistently. The bank was aware of that".
"Despite this, the methodology was changed in the two ways I have noted and the bank was not sufficiently upfront with ASIC in advising of its decision to change the methodology. This is disappointing," Medcraft said.
Recommended for you
Greater consistency across the ASIC adviser exam has helped boost the number of first-time candidates this year with many opting to sit before undertaking a Professional Year.
Financial advice practice Eureka Whittaker Macnaught is in the process of acquiring three firms to boost its annual revenue to $25 million.
AMP has partnered with Dimensional Fund Advisors and SouthPeak IM to launch a suite of investment solutions aimed at expanding retail access to traditionally institutional funds.
The Financial Advice Association Australia has appealed to licensees to urgently update their FAR records as hundreds of advisers are set to depart by the end of the year.
